Search

End-of-year excitement for tax tragics

November has proved to be a very exciting month from a tax tragic’s perspective. We have experienced a generational change at the very top of the Australian Taxation Office administration. Michael D’Ascenzo’s retirement as Commissioner will cap off the renewal of the tax hierarchy, with only Second Commissioner Bruce Quigley remaining to pass on the decades of experience that have otherwise flown out the door.

Michael can look back proudly at the changes he has wrought during his term as Commissioner, the chief among them being his sincere engagement in collaboration and consultation. On behalf of everyone at The Tax Institute, including staff, volunteers and members, I wish Michael well in his new role.

If that is not enough, the appointment of a new Commissioner from the private sector, a first ever, raises intriguing possibilities. The Tax Institute also looks forward to working with the Commissioner-designate, Chris Jordan, in facing the challenges of imposing and maintaining tax laws and their administration. I am sure that the next seven years will be quite a journey for us all.

The Div 6 rewrite policy options paper was released (admittedly in late October) and its contortions began to filter into our psyche during November. Try as I might, I cannot find in it a beneficial simplification of the present mangled state of trust taxation. It can only be hoped that further consultation brings about a sensible outcome for us all — trustees, beneficiaries, tax advisers and, by no means least, tax administrators.

And then along came the exposure draft of the amendments to the general anti-avoidance provision, Pt IVA of the Income Tax Assessment Act 1936 (Cth). The proposed amendments have a certain metaphysical content in the sense that they perplex the mind with nice speculations of philosophy (with apologies to Samuel Johnson). Watching the courts struggle with new concepts like “non-tax effect” will be sport for years to come for us, the tax tragics. For the purpose of illustrating the metaphysical point, it is useful to set out the definition of that term here:

“non-tax effect means an effect other than:

(a)an effect relating to the taxpayer’s liability to tax (or withholding tax) in any year of income; or
(b)an effect that is incidental to achieving an effect, for the taxpayer, covered by paragraph (a).”

It should be noted for posterity that both of these measures (the Div 6 rewrite and Pt IVA) have and will continue to consume a huge number of precious volunteer man-hours in simply coming to grips with their potential impact.

As I write, the Assistant Treasurer, the Hon. David Bradbury, MP, has raised the tempo of debate on the taxation of the digital economy. While the technical matte rs are grounded in the traditional tax issues of source, residency and permanent establishments, the revenue at stake is so vast that no government can afford to ignore the matter. We can expect that the debate will become more intense as governments and revenue authorities collaborate internationally to secure their “fair share”.

KenSchurgott

Ken Schurgott is President of the National Council at The Tax Institute.

The Tax Institute is Australia's leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Popular posts from this blog

It’s been 20 years since Division 7A was enacted, and, despite the passage of time, it remains one of the most complex and challenging provisions in our taxation legislation.

Treasury have released their proposed changes to Division 7A and suggested a number of measures from a new loan model for all existing 7 and 25 year loans and self-correction mechanism to rectify Div 7A breaches to safe harbour rules for the use of assets.

At the sold-out Division 7A Day in Perth on 22 November, Daniel Smedley, CTA, (Sladen Legal) presents the session ‘Issues when dealing with loans and unpaid present entitlements’.

Daniel’s session considered the issues that arise when dealing with loans and unpaid present entitlements primarily in a taxation context including the income tax and capital gains tax implications of forgiving and waiving loans, and the income tax and capital gains tax implications of creating, satisfying, waiving, releasing or assigning unpaid present entitlements (UPEs).

In the lead-in to this year's Death... and Taxes Symposium, we take a look back at an article published in the January issue of Taxation in Australia by Matthew Burgess, CTA, that highlighted just how much had changed in estates in the previous 12 months.

Matthew's article points out that we had seen more changes in key estate planning areas in a single year than each of the previous 30 years combined.

At the Symposium, taking place 18-19 July on the Gold Coast, Matthew co-presents the session 'How do you manage companies and trusts that were controlled by the now deceased?', alongside Todd Want, CTA, with facilitator Peter Godber, CTA.

In the session, they will look at whether it is better to maintain, revive or unwind trusts and companies during or after administration, and identify problems with old structures, considering director, trustee and adviser risks. They will also address trust and company taxation issues.

Written by TaxCounsel Pty Ltd The following points highlight important federal tax developments that
occurred during October 2018.
Each month, these developments are considered in more detail in the
Taxing Issues column of Taxation in Australia, the Institute's member journal. Foreign
investor amendments An amending Bill that was introduced into parliament on
21 September 2018 contains amendments that are intended to comprehensively
tackle the various tax settings that are combined with stapledstructures to deliver low tax rates to foreign
investors. Multinational
amendments The Treasury Laws Amendment (Making Sure Multinationals Pay
their Fair Share of Tax in Australia and Other Measures) Bill 2018) contains
amendments that will (inter alia) amend (from 1 July 2018) the R&D tax
incentive to better target the incentive and encourage firms to increase the
proportion of their business devoted to genuine, additional R&D expenditure
and extend the definition of a “significant globa…